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MVI invests in Zegona Communications and acquires Telecable

Marwyn Value Investors (MVI) has entered into a conditional placing letter to subscribe for a further GBP55.0 million of new ordinary shares in Zegona Communications as part of the placing of new ordinary shares to fund the proposed acquisition of Telecable Capital Holdingand its subsidiaries.

This would increase the MVI Master Fund’s total investment in Zegona to GBP67.0 million (including its initial investment in Zegona in March 2015). The aggregate value of the investment attributable to the Company, including the initial investment in Zegona in March 2015, represents approximately 28.4 per cent of MVI’s NAV (as at 17 July 2015, using the placing price of 150 pence). Following admission of the new ordinary shares, the Master Fund will hold approximately 23.8 per cent of Zegona’s ordinary shares. 

Zegona is placing a total of 167.3 million new ordinary shares at a price per share of 150 pence, equivalent to approximately GBP251.0 million (before expenses). If issued, the placing shares (including the shares to be owned by the Master Fund) are expected to be admitted to the London Stock Exchange’s AIM market and commence trading at 8.00 a.m. on 14 August 2015. Further information is contained in the RNS announcement released by Zegona this morning. 

Zegona was established in March 2015 under the management of Eamonn O’Hare (Chairman and Chief Executive Officer) and Robert Samuelson (Executive Director and Chief Operating Officer) with the objective of acquiring businesses in the European Telecommunications, Media and Technology sector with a ‘Buy‐Fix‐Sell’ strategy. The proposed acquisition of Telecable is consistent with Zegona’s investment strategy. Mark Brangstrup Watts, joint Managing Partner of Marwyn Capital LLP and co‐founder of the Marwyn Group, is a non‐executive director of Zegona. 

Telecable is the leading “quad‐play” telecommunications operator in the Spanish region of Asturias, with more than 164,000 customers, offering television, broadband internet, mobile and fixed‐line telecommunications services to residential and business customers. Telecable operates a network of over 2,400 km of fibre optic cable and 2,600 km of coaxial cable, reaching more than 450,000 homes across Asturias. The Zegona Directors believe that Telecable represents a compelling investment opportunity, driven by its market leading position and strong cash generation, coupled with attractive dynamics in the Spanish telecommunications market and Spanish economy more broadly. 

Robert Ware (pictured), chairman of Marwyn Value Investors Limited, says: “We are delighted to be a cornerstone investor in Zegona and support the proposed acquisition of Telecable. Telecable represents a high‐quality business with strong foundations, excellent growth prospects and attractive market dynamics, and we are excited to partner with Eamonn and Robert to deliver on their vision for the business. This investment demonstrates the continuation of our strategy to diversify the portfolio through supporting high quality management teams and investing in sectors with the potential to deliver significant shareholder value.” 

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